Labour MPs accused ministers yesterday of meekly allowing giant insurance companies to water down a compensation scheme for workers suffering from deadly asbestos-related mesothelioma.

Leading trade unionists Ian Lavery MP and Jim Sheridan MP pledged to fight for improvements to the scheme during a Commons debate on Monday night.

Mr Lavery alleged that the deal cooked up between the government and their company friends had saved the big insurers £1 billion.

While welcoming the government-sponsored compensation scheme as a big step forward, Mr Lavery demanded an increase in payout levels and inclusion of other asbestos-related diseases.

He also urged a much earlier cut-off date for claims, complaining that under the suggested compensation scheme a mesothelioma sufferer must have been diagnosed on or after July 25 2012 to be eligible.

"The disease has a devastating impact on all it touches, both the victims and their loved-ones," said Mr Lavery.

"It is a fatal disease with life expectancy of between nine and 15 months following diagnosis."

Paisley MP Mr Sheridan said that one of his constituents had described the disease as like having a tree growing inside him.

"The branches spread and eventually choke the sufferer to death."

The government's Mesothelioma Bill received an unopposed second reading, but with Labour MPs warning that they would move line-by-line amendments at the committee stage.

North Durham MP Kevan Jones declared that the attitude of hugely profitable insurance companies to a compensation levy costing them just £350 million was an "insult" to the victims.

"It seems that the insurance companies have been in the driving seat in these negotiations," he complained.

Jarrow MP Stephen Hepburn protested that "the insurance companies' fingerprints are all over the Bill."

He lambasted employers for literally "getting away with murder," and insurance companies for "robbing dead people of £1bn."

Work and Pensions Minister Mike Penning said the Bill was "part of the ongoing commitment by the government and the insurance industry to correct the market failure that everyone accepts there has been in respect of mesothelioma cases."

He predicted that 28,500 people would die from mesothelioma between July 2012 and March 2024, the expected end date for the scheme.